Will America Keep on Trucking?
May brought news that trucking prices are hauling upward, and fast. Increased hauling costs often mean a noticeable uptick in price tags for the many goods those trucks deliver. This was a bad omen for Republicans — rising prices have historically complicated things for the party in power during midterm elections.
TL;DR
- Trucking prices are rising rapidly, leading to increased costs for delivered goods.
- This trend is seen as a negative sign for Republicans, given historical correlations between rising prices and electoral difficulties for the party in power.
- The increase in hauling costs is primarily driven by a global spike in fuel prices due to wars and blockades in the Strait of Hormuz and attacks on Russian oil capacity.
- Companies are building up inventories, leading to higher warehouse utilization and rental prices.
- The US government under the Trump administration plans a coordinated international release of oil reserves and is considering suspending the federal gas tax.
- Canada has already suspended its national gas tax.
- Diesel prices, which impact most delivery vehicles, are particularly consequential for the overall economy.
- Railroads are a more energy-efficient competitor to trucking but face limitations in rapidly scaling capacity and addressing the 'last mile' delivery problem.
- Increased shipping costs have a significant and persistent effect on domestic inflation.
- The US's increased domestic oil production offers some offsetting benefits to rising energy costs, though these benefits are unevenly distributed.